How To Benefit From The Battle Between Credit Card Companies

The battle between credit card companies continues to intensify, which is good news for consumers. Zero-percent introductory offers are getting longer, which can help people get out of debt faster. Rewards are becoming richer, which can put more money in your pocket. And credit card companies are approving more people, as the memories of the 2008 Great Recession fade.

Here are three trends that can help put more money in your pocket, along with a warning. Credit cards can quickly become expensive if you are not careful or responsible. Each perk has a potential trap that you should avoid.

1. 0% Offers Are Getting Longer

The average interest rate on credit card debt is 13.76%. If you have a $5,000 balance at a 13.76% rate and pay $150 a month towards that debt, it will take 43 months to eliminate the debt and cost $1,337 of interest along the way. With a balance transfer, you can move the debt from a high-interest-rate credit card to a 0% promotional offer. The good news for consumers: balance transfer offers are getting longer.

Just last week, Discover extended its 0% offer from 18 to 21 months. There is an upfront balance transfer fee of 3%. Using the example above ($5,000 of debt at 13.76%), a balance transfer could save a consumer more than $1,000 during the life of the balance. And that savings includes the cost of the balance transfer fee.

Warning: You typically need to have good or excellent credit to qualify for a balance transfer. Make sure you complete the balance transfer as soon as you open the new credit card, because the 0% clock starts from when you open the card, not from the date of the transfer. And make sure you pay on time every month, otherwise you could be hit with late fees and eventually lose the promotional offer.